Parliament logjam puts financial sector reforms in jeopardy

An elated government’s joys after winning the FDI vote in Parliament were short-lived and what appeared to have paved the way for more reforms for a government working against the political calendar proved utterly misplaced.

Now, Wal-Mart bribery issue and squabbles among parties over a bill providing reservation in promotion to SCs and STs have become the new hurdles in the road to reforms.

Compounding the problems is the short duration of the winter session of Parliament from here on. Investors in India had their sights fully set on the winter session which was to pass the crucial banking, pension and companies bills, including freeing up the cash-strapped insurance sector. But, if the current mood of Opposition is anything to go by, they are certain to disrupt both the Houses of Parliament until their queries related to Wal-Mart expenses on lobbying, including in India, is satisfied.

Among many of their demands, one also includes revelations of names of those officials in India who have taken bribe from the US retail giant as claimed by senior BJP leader Yashwant Sinha on the floor of the Lok Sabha. Wal-Mart has in its lobbying disclosure report to the US Senate said it has spent Rs 125 crore on lobbying and $3 million have been spent in 2012 itself for entering the Indian market.

The issue here is that lobbying, which is accepted in the US, is considered illegal in India and equated with bribe. So, if the Wal-Mart has said that crores of rupees were spent in India, then it is a kind of bribe, the Opposition has alleged. They have also said that the whole issue of lobbying in India raises a question mark on the implementation of FDI in retail.

Next comes the Schedule Caste and Schedule Tribe reservation in promotion issue. The BSP, which has just the other day sided with the UPA and bailed it out on FDI issue in both the Houses, wants the favour returned immediately by way of getting the SC/ST bill passed. It has also threatened to withdraw its support to the UPA if no concrete action is taken in the next three to four days. Another regional supporter, the Samajwadi Party has said it will disrupt the House if a nod is given to the bill.

According to Amir Ali, Assistant Professor from JNU, the whole episode of getting the FDI bill passed through the help of some parties, which in turn striking hard bargains for something else, only shows the unprofessional nature of Indian politics. “It is a hostage politics going on in India, where the issue is not important but it is used as a bargaining tool for other issues,” Ali said.

Re-ignite the economy

At the moment, these two issues seemingly are enough to engage government’s attention for the next seven days that it has at hand this winter session and there by bringing to a nought its efforts to get  some key reform bills passed aiming to re-ignite the economy.

With great effort, the government was able to get the Lok Sabha nod for debt recovery bill but the much awaited banking law amendment bill could not be tabled even for consideration. This Bill seeks to among other things to lift the 10 per cent voting rights cap in private sector banks and paves the way for the Reserve Bank of India to give some additional banking licences to private sector players. It is important from the point of view of financial inclusion programme which the government is pursuing vigorously to include the un-banked rural populace with the banking system in the country.

The Opposition is adamant that the bill be referred to the Parliamentary Standing Committee on Finance once more because the government has added a provision giving banks the right to invest in futures after the bill was approved by the committee. BJP says, the addition makes it altogether a new bill, which needs to be vetted again. Government, on the other hand, claims that there is nothing new in inserting a new provision and that it is well within its right to do that.

Other important bills are raising FDI limit in insurance sector to 49 per cent from the current 26 per cent and opening the lucrative pension sector to overseas investors.

Bringing foreign capital in these sectors is important to expand their base and also channelising long-term public savings in the infrastructure sector for which the government has envisaged a $1 trillion investment in the coming five years. India needs close to Rs 30,000 crore for the expansion of insurance in the country in next five years. But, the BJP seems determines to stall any changes in pension and insurances bills cleared by the standing committee. So, mopping up majority on these in such a short span too does not look possible.

The companies bill, bills related to prevention of bribery of foreign public officials, coal mines bill, higher education bill, criminal law bill and universities bill are some other legislations that were to come up in the session, but it all looks a far cry.

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